Author Warren MacKenzie blows away myths of retirement in a new book that challenges everything from income needs to life after work.

Warren MacKenzie, founder and CEO of Second Opinion Investor Services, Inc., has written, along with his vice-president, Ken Hawkins, The New Rules of Retirement: What your financial planner isn't telling you (HarperCollins).

The book, which provides investor advice, blasts a number of myths about retirement including that retirement means a life of leisure, retirees need 80 per cent of their pre-retirement income and you can determine when you retire. All of these assumptions are wrong, the authors write, as people continue to work or volunteer, many retirees' costs plummet with kids out of the nest and illness or plant shutdown can determine retirement day for you.

A: There is a huge conflict of interest in the financial services world. The banks are not out to do what is best for the investor; the banks are out to make money. There's been this myth that advisers are knowledgeable about how to protect your money and that is not true. There are 80,000 representatives who depend on people believing this stuff. The conflict exists everywhere that people are selling a product and giving advice. If you were buying a new home and getting a home inspection, would you want to get the inspection from the owner?

Q: Why are we so vulnerable to bad advice?

A: We didn't learn about investing in high school. It wasn't in the interest of any one group to inform people. Well-informed people are not buying the bank's mutual funds. You should get an adviser who is not paid by someone else to sell products.

Q: When did money management get so complicated? It used to be enough to own your home and have some savings.

A: At one time, the average worker had a GIC. About 20 years ago, mutual funds became the new thing. Many years ago, the brightest people went into medicine and engineering. Today, they go into institutions and create these structured products on all these things they can offer to investors. They are complicated. The first objective is to make money for the institution. If it benefits the consumer, that is a second objective. That's how you get these structured products.

Q: What should average investors do?

A: I think they should steer clear from anything they don't understand and that means these structured things. They are sold as having a guarantee. If you are in a well-designed portfolio, you don't need a guarantee.

Well-diversified portfolios with bonds and exchange-traded funds don't need a guarantee. They can withstand the ups and downs of the market.

Q: When should you start planning for retirement?

A: I don't think there's ever a point that it's too late. Or too early. A benefit of starting early is that it teaches you a way of life, of not focusing on what you can spend but on putting something aside. Living within your means is a huge value that is learned at an early age. It's a no-brainer; you will do well all your life. You don't have to make a high income; what you have to do is live within your means. You could have a low-income person living within their means and saving a small amount and they will be financially secure.

Q: Why don't we need 80 per cent of our working wage when we retire?

A: While working and taking care of family members, your time is precious, so you are willing to pay for time, whether it is hiring someone to walk the dog or pay for fast food. But, when you are retired, you have lots of time. You can save a lot of money doing things yourself that otherwise you might never have done.

Q: If you had only one tip, what would it be?

A: Have a financial plan of how things will work out based on reasonable assumptions. It is easy to do it yourself if you are not trying to beat the market: half stocks and half bonds and rebalance once a year. The couch potato formula. Don't try to beat the market.

Q: What happens to your great plan if you lose your job now?

A: The best you can do is cut back on spending. If you get a job that pays less, spend less. We can spend a lot less than we do. It's not as big a hardship as we think it is. If you make $10 an hour, then judge everything by how many hours you have to work for it. Is a $100 jacket worth working 10 hours for? Give everything a time value and cut out things you are not getting the value for.

Q: What other adjustments can we make in tough times?

A: The reality is you have to deal with what you have. Perhaps you have to live in a smaller place. Perhaps you can do with one car. But you can feel good. Maybe you have to work a little bit longer, take another job. In the research for this book, it is so clear people have to work for not just the money but their sense of personal worth. In my company, I have two associates who had retired but were bored silly. Now they are contributing.

You can't just spend your time doing nothing. You have to work or volunteer or get out there. I am having a ball here. I am at an age (62) I could retire, but I want to do something.

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